Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 13, Problem 13.17E
Capital expenditures budget
On August 1, 20Y4. the controller of Handy Dan Tools Inc. is planning capital expenditures for the years 20Y5-20Y8. The controller interviewed several Handy Dan executives to collect the necessary information for the capital expenditures budget. Excerpts of the interviews are as follows:
Director of Facilities: A construction contract was signed in May 20Y4 for the construction of a new factory building at a contract cost of $9,000,000. The construction is scheduled to begin in 20Y5 and completed in 20Y6.
Vice President of Manufacturing: Once the new factor)' building is finished, we plan to purchase $3-6 million in equipment in late 20Y6. I expect that an additional $500,000 will lx-needed early in the following year (20Y7) to test and install the equipment before we can begin production. If sales continue to grow, I expect we'll need to invest another half million in equipment in 20Y8.
Vice President of Marketing: We have really been growing lately. I wouldn't be surprised if we need to expand the size of our new factory building in 20YS by at least 25%. Fortunately, we expect inflation to have minimal impact on construction costs over the next four years. Additionally, 1 would expect the cost of the expansion to Ik- proportional to the size of the expansion.
Director of Information Systems: We need to upgrade our information systems to wireless network technology. It doesn't make sense to do this until after the new factory building is completed and producing product. During 20Y7, once the factor)' is up and running, we should equip the whole facility with wireless technology. I think it would cost us $400,000 today to install the technology. However, prices have been dropping by 10% per year, so it should be less expensive at a later date.
President: I am excited about our long-term prospects. My only short-term concern is financing the $5,000,000 of construction costs on the portion of the new factor)' building scheduled to be completed in 20Y5.
Use the interview information above to prepare a capital expenditures budget for Handy Dan Tools Inc. for the years 20Y5-20Y8.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
On January 1, 20Y2, the controller of Omicron Inc. is planning capital expenditures for the years 20Y2-20Y5. The following interviews helped the controller collect the necessary information for the capital expenditures budget:
Director of Facilities: A construction contract was signed in late 20Y1 for the construction of a new factory building at a contract cost of $10,000,000. The construction is scheduled to begin in 20Y2 and be completed in 20Y3.
Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $1.5 million in equipment in late 2OY3. I expect that an additional $200,000 will be needed early in the following year (20Y4) to test and install the equipment before we can begin production. If sales continue to grow,
I expect we'll need to invest another $1,000,000 in equipment in 20Y5.
Chief Operating Officer: We have really been growing lately. I wouldn't be surprised if we need to expand the size of our new factory building in 20Y5 by at…
On January 1, 20Y6, the controller of Omicron Inc. is planning capital expenditures for the years 20Y6–20Y9. The following interviews helped the controller collect the necessary information for the capital expenditures budget:Director of Facilities: A construction contract was signed in late 20Y5 for the construction of a new factory building at a contract cost of $10,000,000. The construction is scheduled to begin in 20Y6 and be completed in 20Y9.Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $1.5 million in equipment in late 20Y7. I expect that an additional $200,000 will be needed early in the following year (20Y8) to test and install the equipment before we can begin production. If sales continue to grow, I expect we’ll need to invest another $1,000,000 in equipment in 20Y9.Chief Operating Officer: We have really been growing lately. I wouldn’t be surprised if we need to expand the size of our new factory building in 20Y9 by at…
<
On August 1, 20Y4, the controller of Handy Dan Tools Inc. is planning capital expenditures for the years 2015-20Y8. The controller interviewed several Handy Dan executives to
collect the necessary information for the capital expenditures budget. Excerpts of the interviews are as follows:
Director of Facilities: A construction contract was signed in May 20Y4 for the construction of a new factory building at a contract cost of $11,500,000. The construction is scheduled
to begin in 20Y5 and completed in 20Y6.
Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $5.8 million in equipment in late 20Y6. I expect that an additional $870,000 will be
needed early in the following year (20Y7) to test and install the equipment before we can begin production. If sales continue to grow, I expect we'll need to invest another 500,000
in equipment in 20Y8.
Vice President of Marketing: We have really been growing lately. I wouldn't be surprised if we need to…
Chapter 13 Solutions
Survey of Accounting (Accounting I)
Ch. 13 - Static budgets are often used: A.By production...Ch. 13 - The total estimated sales for the coming year is...Ch. 13 - Dixon Company expects $650,000 of credit sales in...Ch. 13 - The actual and standard direct materials costs for...Ch. 13 - Bower Company produced 4,000 units of product. The...Ch. 13 - Prob. 1CDQCh. 13 - What is the manager’s role in a responsibility...Ch. 13 - Briefly describe the type of human behavior...Ch. 13 - Give an example of budgetary slack.Ch. 13 - What behavioral problems are associated with...
Ch. 13 - Prob. 6CDQCh. 13 - Prob. 7CDQCh. 13 - Under what circumstances would a static budget be...Ch. 13 - How do computerized budgeting systems aid firms in...Ch. 13 - What is the first step in preparing a master...Ch. 13 - Why should the production requirements set forth...Ch. 13 - Why should the timing of direct materials...Ch. 13 - Prob. 13CDQCh. 13 - Prob. 14CDQCh. 13 - Prob. 15CDQCh. 13 - Prob. 16CDQCh. 13 - Prob. 17CDQCh. 13 - Prob. 18CDQCh. 13 - What is meant by reporting by the "principle of...Ch. 13 - Prob. 20CDQCh. 13 - How are standards used in budgetary performance...Ch. 13 - a. What are the two variances between the actual...Ch. 13 - Prob. 23CDQCh. 13 - Prob. 24CDQCh. 13 - Prob. 25CDQCh. 13 - Prob. 26CDQCh. 13 - Flexible budget for selling and administrative...Ch. 13 - Static budget vs. flexible budget The production...Ch. 13 - Flexible budget for Fabrication Department...Ch. 13 - Sales and production budgets Ultimate Audio...Ch. 13 - Professional fees earned budget Day & Spieth,...Ch. 13 - Professional labor cost budget Based on the data...Ch. 13 - Direct materials purchases budget Zippy's Frozen...Ch. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Production and direct labor cost budgets Levi...Ch. 13 - Factory overhead cost budget Nutty Candy Company...Ch. 13 - Cost of goods sold budget The controller of Pueblo...Ch. 13 - Prob. 13.13ECh. 13 - Schedule of cash collections of accounts...Ch. 13 - Schedule of cash payments Tadpole Learning Systems...Ch. 13 - Schedule of cash payments Organic Physical Therapy...Ch. 13 - Capital expenditures budget On August 1, 20Y4. the...Ch. 13 - Standard product cost Sorrento Furniture Company...Ch. 13 - Prob. 13.19ECh. 13 - Direct materials variances The following data...Ch. 13 - Standard direct materials cost per unit from...Ch. 13 - Standard product cost, direct materials variance...Ch. 13 - Direct labor variances The following data relate...Ch. 13 - Prob. 13.24ECh. 13 - Direct materials and direct labor variances At the...Ch. 13 - Prob. 13.26ECh. 13 - Factory overhead cost variances The following data...Ch. 13 - Prob. 13.28ECh. 13 - Factory overhead variance corrections The data...Ch. 13 - Prob. 13.30ECh. 13 - Sales, production, direct materials purchases, and...Ch. 13 - Sales, production, direct materials purchases, and...Ch. 13 - Sales, production, direct materials purchases, and...Ch. 13 - Sales, production, direct materials purchases, and...Ch. 13 - Budgeted income statement and supporting budgets...Ch. 13 - Budgeted income statement and supporting budgets...Ch. 13 - Budgeted income statement and supporting budgets...Ch. 13 - Budgeted income statement and supporting budgets...Ch. 13 - Budgeted income statement and supporting budgets...Ch. 13 - Budgeted income statement and supporting budgets...Ch. 13 - Prob. 13.2.7PCh. 13 - Budgeted income statement and supporting budgets...Ch. 13 - Cash budget The controller of Shoe Mart Inc. asks...Ch. 13 - Cash budget The controller of Shoe Mart Inc. asks...Ch. 13 - Direct materials and direct labor variance...Ch. 13 - Direct materials and direct labor, variance...Ch. 13 - Prob. 13.6.1PCh. 13 - Prob. 13.6.2PCh. 13 - Prob. 13.6.3PCh. 13 - Prob. 13.6.4PCh. 13 - Prob. 13.6.5PCh. 13 - Standards for nonmanufacturing expenses The...Ch. 13 - Prob. 13.7PCh. 13 - Prob. 13.1.1MBACh. 13 - Prob. 13.1.2MBACh. 13 - Prob. 13.1.3MBACh. 13 - Prob. 13.1.4MBACh. 13 - Prob. 13.1.5MBACh. 13 - Prob. 13.1.6MBACh. 13 - Prob. 13.2.1MBACh. 13 - Prob. 13.2.2MBACh. 13 - Prob. 13.2.3MBACh. 13 - Prob. 13.2.4MBACh. 13 - Process yield Hendrick Motorsports sponsors cars...Ch. 13 - Prob. 13.3.1MBACh. 13 - Prob. 13.3.2MBACh. 13 - Prob. 13.3.3MBACh. 13 - Prob. 13.3.4MBACh. 13 - Prob. 13.4.1MBACh. 13 - Prob. 13.4.2MBACh. 13 - Prob. 13.4.3MBACh. 13 - Prob. 13.4.4MBACh. 13 - Prob. 13.5.1MBACh. 13 - Prob. 13.5.2MBACh. 13 - Prob. 13.5.3MBACh. 13 - Prob. 13.5.4MBACh. 13 - Utilization rate Delta Air Lines (DAL) reported...Ch. 13 - Prob. 13.6.2MBACh. 13 - Prob. 13.6.3MBACh. 13 - Prob. 13.7.1MBACh. 13 - Prob. 13.7.2MBACh. 13 - Prob. 13.7.3MBACh. 13 - Ethics and professional conduct in business The...Ch. 13 - Prob. 13.2.1CCh. 13 - Prob. 13.2.2CCh. 13 - Prob. 13.3.1CCh. 13 - Prob. 13.3.2CCh. 13 - Objectives of the master budget Domino's Pizza LLC...Ch. 13 - Prob. 13.5.1CCh. 13 - Prob. 13.5.2CCh. 13 - Prob. 13.6CCh. 13 - Prob. 13.7C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- agenow.com/ilrn/takeAssignment/takeAssignmentMain.do?inprogress=true to eBook Capital Expenditures Budget On January 1, 20Y6, the controller of Omicron Inc. is planning capital expenditures for the years 20Y6-20Y9. The following interviews helped th controller collect the necessary information for the capital expenditures budget: Director of Facilities: A construction contract was signed in late 20Y5 for the construction of a new factory building at a contract cost of $10,000, The construction is scheduled to begin in 20Y6 and be completed in 20Y9. Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $1.5 million in equipment in late 20Y7. I expect th additional $200,000 will be needed early in the following year (20Y8) to test and install the equipment before we can begin production. If sales cc to grow, I expect we'll need to invest another $1,000,000 in equipment in 20Y9. Chief Operating Officer: We have really been growing lately. I…arrow_forwardHugo Medical Supply has applied for a loan. Pacific Commerce Bank has requested a budgeted balance sheet as of April 30, and a combined cash budget for April. As Hugo Medical Supply's controller, you have assembled the following information: a. March 31 equipment balance, $52,600; accumulated depreciation, $41,300. b. April capital expenditures of $ 42,400 budgeted for cash purchase of equipment. c. April depreciation expense, $700. d. Cost of goods sold, 60%of sales. e. Other April operating expenses, including income tax, total $14,200, 35% of which will be paid in cash and the remainder accrued at April 30. f. March 31 owners' equity, $92,600. g. March 31 cash balance, $40,300. h. April budgeted sales, $90,000, 70% of which is for cash. Of the remaining 30%, half will be collected in April and half in May. i. April cash collections on March sales, $29,100. j. April cash payments of March 31 liabilities incurred for March…arrow_forwardFairview Medical Supply has applied for a loan. First American Bank has requested a budgeted balance sheet as of April 30, and a combined cash budget for April. As Fairview Medical Supply's controller, you have assembled the following information: a. March 31 equipment balance, $52,700; accumulated depreciation, $41,100. b. April capital expenditures of $42,700 budgeted for cash purchase of equipment. c. April depreciation expense, $500. d. Cost of goods sold, 60% of sales. e. Other April operating expenses, including income tax, total $13,400, 30%of which will be paid in cash and the remainder accrued at April 30. f. March 31 owners' equity, $93,600. g. March 31 cash balance, $40,100. h. April budgeted sales, $91,000, 70% of which is for cash. Of the remaining 30%, half will be collected in April and half in May. i. April cash collections on March sales, $29,200. j. April cash payments of March 31 liabilities incurred…arrow_forward
- The City of Bedford Falls debt service fund budgeted $150,000 (2 payments of $75,000) for interest and an annual principal payment of $500,000. Funding will be transferred from the general fund at the time payments are to be made. Interest payments will be December 15 and June 15. Principal will be paid on June 15. Journalize the budget for July 1 Journal any necessary December 15 entry(ies) What is the amount of accrued interest to be recorded in the Debt Service Fund at June 30?arrow_forwardAt the beginning of the period, the Fabricating Department budgeted direct labor of 72,000 and equipment depreciation of 18,500 for 2,400 hours of production. The department actually completed 2,350 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.arrow_forwardPrinting Supply of Baltimore has applied for a loan. Its bank has requested a budgeted income statement for April 2024 and budgeted balance sheet at April 30, 2024. The March 31, 2024, balance sheet follows: As Tune Printing Supply's controller, you have assembled the following additional information: a. April dividends of $6,000 were declared and paid. b. April capital expenditures of $16,200 budgeted for cash purchase of equipment. c. April depreciation expense, $500. d. Cost of goods sold, 45% of sales. e. Desired ending inventory for April is $22,800. f. April selling and administrative expenses include salaries of $32,000, 30% of which will be paid in cash and the remainder paid next month. g. Additional April selling and administrative expenses also include miscellaneous expenses of 15% of sales, all paid in April. h. April budgeted sales, $86,000, 50% collected in April and 50% in May. i. April…arrow_forward
- Printing Supply of Baltimore has applied for a loan. Its bank has requested a budgeted income statement for April 2024 and budgeted balance sheet at April 30, 2024. The March 31, 2024, balance sheet follows: As Tune Printing Supply's controller, you have assembled the following additional information: a. April dividends of $6,000 were declared and paid. b. April capital expenditures of $16,200 budgeted for cash purchase of equipment. c. April depreciation expense, $500. d. Cost of goods sold, 45% of sales. e. Desired ending inventory for April is $22,800. f. April selling and administrative expenses include salaries of $32,000, 30% of which will be paid in cash and the remainder paid next month. g. Additional April selling and administrative expenses also include miscellaneous expenses of 15% of sales, all paid in April. h. April budgeted sales, $86,000, 50% collected in April and 50% in May. i. April…arrow_forwardTune Printing Supply of Baltimore has applied for a loan. Its bank has requested a budgeted income statement for April 2024 and budgeted balance sheet at April 30, 2024. The March 31, 2024, balance sheet follows: As Tune Printing Supply's controller, you have assembled the following additional information: a. April dividends of $6,000 were declared and paid. b. April capital expenditures of $16,200 budgeted for cash purchase of equipment. c. April depreciation expense, $500. d. Cost of goods sold, 45% of sales. e. Desired ending inventory for April is $22,800. f. April selling and administrative expenses include salaries of $32,000, 30% of which will be paid in cash and the remainder paid next month. g. Additional April selling and administrative expenses also include miscellaneous expenses of 15% of sales, all paid in April. h. April budgeted sales, $86,000, 50% collected in April and 50% in May. i. April cash payments of…arrow_forwardThe Franklin Management Association held its annual public relations luncheon in April Year 2. Based on the previous year’s results, the organization allocated $24,818 of its operating budget to cover the cost of the luncheon. To ensure that costs would be appropriately controlled, Molly Hubbard, the treasurer, prepared the following budget for the Year 2 luncheon. The budget for the luncheon was based on the following expectations: The meal cost per person was expected to be $12.50. The cost driver for meals was attendance, which was expected to be 1,470 individuals. Postage was based on $0.58 per invitation and 3,350 invitations were expected to be mailed. The cost driver for postage was number of invitations mailed. The facility charge is $1,700 for a room that will accommodate up to 1,600 people; the charge for one to hold more than 1,600 people is $2,200. A fixed amount was designated for printing, decorations, the speaker’s gift, and publicity. FRANKLIN MANAGEMENT…arrow_forward
- Tri-County Social Service Agency is a not-for-profit organization in the Midwest. Use the following Information to complete the cash budget for the year ending December 31. The Board of Trustees requires that Tri-County maintain a minimum cash balance of $8,000. If cash is short, the agency may borrow from an endowment fund the amount required to maintain the $8,000 minimum. It is anticipated that the year will begin with an $11,000 cash balance. Contract revenue is received evenly during the year. Mental health Income is expected to grow by $5,000 in the second and third quarters; no change is expected in the fourth quarter. Required: 2. Complete the cash budget for each quarter and the year as a whole. 3. Determine the amount that the agency will owe the endowment fund at year-end. Complete this question by entering your answers in the tabs below. Required 2 Required 3 Complete the cash budget for each quarter and the year as a whole. (Cash deficiency and repayments should be…arrow_forwardTri-County Social Service Agency is a not-for-profit organization in the Midwest. Use the following information to complete the cash budget for the year ending December 31. The Board of Trustees requires that Tri-County maintain a minimum cash balance of $8,000. If cash is short, the agency may borrow from an endowment fund the amount required to maintain the $8,000 minimum. It is anticipated that the year will begin with an $11,000 cash balance. Contract revenue is received evenly during the year. Mental health income is expected to grow by $5,000 in the second and third quarters; no change is expected in the fourth quarter. Required: 2. Complete the cash budget for each quarter and the year as a whole. 3. Determine the amount that the agency will owe the endowment fund at year-end.arrow_forwardEmmanuel Macron has the following budgeted business transactions for the month of May 2020: insurance refund received: $500; payments to be made to materials suppliers: $15,000; payments to be made to employees: $4,000; cash expected from customers: $25,000; budgeted depreciation charge on non-current assets: $800; budgeted interest paid to bank: $40; personal drawings: $2,000. At 1 May 2020, Emmanuel is budgeting an overdraft at the bank of $4,000. What is Emmanuel's budgeted cash position at the end of May 2020? $340 overdrawn $340 cash in the bank $460 cash in the bank $460 overdrawnarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY